The Case

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) v Queensland Rail Ltd (2015)

The Queensland Rail Transit Authority (QRTA) was established under the Queensland Rail Transit Authority Act 2013 (QRTA Act). QRTA’s primary purpose is to supply labour to a related entity, Queensland Rail Limited (QRL).

In drafting the QRTA Act, the Queensland State Parliament sought to remove QRTA employees from the operation of the Fair Work Act 2009 (Cth) (FW Act) by stating in the legislation QRTA was not a body corporate or a trading corporation.

The FW Act applies to constitutionally covered entities, which include:

• the Commonwealth;
• Commonwealth authorities;
• employers in the ACT or NT;
• a person or entity that employs, in connection with trade or commerce, flight crew officers, maritime employees or waterside workers;
• constitutional corporations, i.e. foreign corporations, or trading or financial corporations formed within Australia; and
• private-sector employers in any of the referring States (all States except WA have referred their powers to the Commonwealth and now operate under the FW Act).

To determine whether QRTA was a constitutional corporation, two questions needed to be answered:

1. Is QRTA a corporation or body corporate?

2. If QRTA is a corporation or body corporate, is QRTA a foreign, trading or financial corporation?

The union commenced proceedings to seek a determination:

• QRTA was a constitutional corporation as defined by the FW Act, in that it was a body corporate and a trading corporation under the Australian Constitution; and
• therefore, the employment conditions of the QRTA employees were regulated by the FW Act.

The Verdict

The High Court found QRTA was a body corporate and a trading corporation under the Australian Constitution because the QRTA:

• was a constitutional corporation within the meaning of the FW Act, even though the QRTA Act stated QRTA was not a body corporate − the Court held that the Queensland State Parliament could not determine the limits of federal legislative power by simply stating in a piece of legislation that QRTA was not a body corporate;
• was “created as a separate and duty-bearing entity” with “the full character of a corporation”; and
• was engaging in a trading activity in supplying labour to QRL (the Court held that this was the case despite the prices for supply of that labour being stuck at a level that yielded no profit to QRTA).

The Lesson

Most employers and their employees are now covered by the FW Act. However, some State industrial laws still cover State public servants, e.g. teachers and police officers.

This case demonstrates that State industrial laws cannot exclude the operation of the FW Act simply by stating that an authority is not a trading corporation or a body corporate.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.